Walter Scott to Retire, and Level 3 Redeems Converts

November 25th, 2013 by · 15 Comments

Come next May, Level 3 will have a new Chairman to go along with this year's newly minted CEO. Walter Scott will be retiring from the board of directors and his post as its chairman by simply not standing for reelection when the 2014 annual meeting comes around. The new chairman will be the board's resident admiral, James O. Ellis, Jr.

Walter Scott has been one of the primary driving forces behind the company since its days as part of Kiewit, through the glory days of the buildout, the depths of the telecom nuclear winter, and the long consolidation phase. The other original main protagonist, James Crowe, left the company this past spring as Jeff Storey took the reins. The second half of this leadership transition comes at the moment when Level 3 is on the cusp of sustainable positive earnings per share at long last.  That isn't exactly the place the company hoped to be at this point back in 1998, but it's definitely a milestone that has been won the hard way.

Meanwhile, the company is ever busy on the balance sheet front. Today they announced their intention to redeem the 6.5% converts due 2016 at the end of the year, a move that had been expected by various analysts. There are $201M or so worth of the bonds outstanding, but since they convert at $18.525 we will most likely see them converted to stock instead of requiring cash. A bit of dilution of course, but also another chunk of cash interest off the books for next year's earnings.

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Categories: Financials · Internet Backbones

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15 Comments So Far


  • Dan Caruso says:

    Congratulations and best wishes to Walter Scott. Mr. Scott has a vibrant history as one of America’s great business leaders. He spent his career at Peter Kiewit & Sons, one of the nations leading construction firms. He succeeded Peter Kiewit in 1979 and led the firm for decades. Mr. Scott has also served on Berkshire Hathaway’s board. He was the financial spark behind MFS and Level 3 — as well as many other ventures. Mr. Scott is also a very generous philanderer.

    One of my biggest regrets from my MFS and LVLT years was not building a relationship with Mr. Scott. I wish him well.

  • Anonymous says:

    Mr. Caruso:

    I think you meant “philantropist.”

  • en_ron_hubbard says:

    Don’t know about Walter Scott, but I am a very generous philanderer.

  • Anonymous says:

    Had I known Mr. Scott when I was at Level 3 it would have changed his life.

  • OleTelCoveGuy says:

    Actually Dan those who know you knew you did that on purpose with that wicked sense of humor. No correction was needed! 😉

  • Anonymous says:

    If my math is right. for current shareholders the conversion results in 5% dilution (or roughly $1.47/shr) at current price of 29.78. The debt service savings amounts to roughly $.06/share (post dilution).

  • Anonymous says:

    Walter Scott, Jim Crowe and Kevin OHara are instrumental in the careers and livelihoods of many and a part of such an exciting time in telecom and dot.com history as the founders of Level 3. Although likely moving on for personal reasons, with all 3 moving on from the company, it is also a reminder that just because you are a founder, it doesn’t mean you are the right person to run the company over time and that companies can move onward and upward over time with the right players. Bittersweet.

    • Anonymous says:

      Conveniently you leave out all the people that lost money and the wealth destruction caused by listening to these same people. Careers and livelihoods destroyed as well by them blowing smoke up everyone’s a** for years, toe stubs, wrong decisions at every turn, etc. They laughed all the way to the bank the whole time spinning a wondrous tale. Let’s be a little objective before you sing too much praise for these great founding fathers.

    • Anonymous says:

      In my opinion, none of these guys did very much as “founders.” The only one who deserves much credit for the shitpile is Sunit, who beyond all rationality, continued to convince people to invest, and managed to keep kicking the debt can down the road – even though they all saw on its face how much they were losing by doing so. And one quarter of slash and burn to a razor thin black column is not all that convincing given all they’ve falsely claimed to “integrate” over the years… and all the lives they’ve helped destroy in the process. And don’t forget the irrational pricing they’ve contributed to the market now, either: selling bandwidth well below what it costs to sustain it, hoping someday they will cross that magic bulk profitability line.

      A basketcase company with no direction or mission is not something I’d like to honor.

      Tell you what though, they ought to put Sunit in charge of the treasury or the fed, because that’s about what the US needs now: some magic to convince people to keep pumping money into the titanic.

  • Anonymous says:

    The beginning of the end is when execs put their convenience and their lifestyle wants (corp jets, bogarting huge wealth, etc) ahead of a living wage for employees giving every bit of their life to a company. At some point entitlement kicks in and just takes over.

  • Anonymous says:

    so this period of time is the end of the beginning?

  • Anonymous says:

    What do you think about recent speculation on other boards of a Centurylink Level 3 merger. It is my belief if you want to be in the top 3 with seat next to ATT and VZ you need wirelss more then another LH route which woudl make T-mobile more attractive to either

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